The container shipping market has entered the traditional peak season for nearly two months, yet freight rates continue to fall with no signs of recovery so far.
According to the latest data released by the Shanghai Shipping Exchange on August 22, the SCFI index fell by 44.83 points to 1415.36 points last week, a weekly decline of 3.07%, marking an 11-week consecutive decline. All four major deep-sea routes continued to fall, with the European route experiencing the largest drop.
Last week, the freight rate from the Far East to the US West Coast fell by $115 per FEU to $1644, a weekly drop of 6.54%; the freight rate from the Far East to the US East Coast fell by $106 per FEU to $2613, a weekly drop of 3.89%; the freight rate from the Far East to Europe fell by $152 per TEU to $1668, a weekly drop of 8.35%; the freight rate from the Far East to the Mediterranean fell by $54 per TEU to $2225 compared to the previous week, a weekly drop of 2.37%.
On the regional routes, the freight rate from the Far East to Japan’s Kansai region rose by $1 per TEU to $314 compared to the previous week; the freight rate from the Far East to Japan’s Kanto region fell by $1 per TEU to $323; the freight rate from the Far East to Southeast Asia fell by $8 per TEU to $398; the freight rate from the Far East to South Korea rose by $1 per TEU to $139.
Industry insiders stated that the cargo volume on major Europe and US routes is insufficient, coupled with container shipping companies not actively managing capacity. Alliances like Gemini, formed by Maersk and Hapag-Lloyd, have almost zero blank sailings on major routes to protect volume and maintain market share. Additionally, extra-loader vessels on the European route are competing for cargo, all of which are exacerbating the downward pressure on freight rates.
Currently, container shipping companies are holding the line at the cost level on the US West Coast route, around $1550 to $1650 per FEU, which can be maintained as long as oil prices do not rise. Rates on the US East Coast route are around $2500 to $2550, with reports of special rates as low as $2400 to compete for cargo. Rates on the European route have been slightly reduced to around $2500 to $2600, with special offers intensifying competition for cargo.
After the Sino-US tariff grace period was extended for the second time, the market originally expected the release of deferred shipments from manufacturers and year-end demand for Christmas and other holidays. However, cargo volumes have yet to show improvement. The industry believes the lack of volume could be due to various reasons, including shippers having already shipped goods early in June and July, high inventory levels still being digested, or reduced consumption due to US tariff-induced inflation. This has also weakened market expectations for a freight rate rebound in early September. It is expected that shipping companies will increase blank sailings and route adjustments on US routes in early September to prevent further rate declines.
Looking ahead, market participants point out that current cargo volumes are average. It is expected that previously advanced shipments of end products will gradually be digested, and a small wave of shipments for the year-end shopping season in Europe and the US in September is not out of the question. As the Sino-US tariff truce lasts until November, the future direction of the Trump administration’s tariff policy will have a critical impact on global supply chain布局 (layout), trade flows, and freight rates.
